Accountancy Europe responds to the International Auditing and Assurance Standards Board (IAASB) consultation on the proposed revision of ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity’s Annual Financial Statements. The response reflects input from our members across Europe. Alongside the detailed response, we also submitted an accompanying letter to the IAASB highlighting our key concerns.
We welcome the IAASB’s initiative to modernise this longstanding standard and recognise the importance of strengthening it. However, we believe that the cumulative effect of some of the proposals risks increasing the work effort associated with an interim review without changing its limited assurance nature.
The revised standard is significantly longer and more detailed. While increased length and modernised drafting do not in themselves mean more work, certain proposed requirements, particularly those relating to going concern, may result in additional work in practice. We are concerned that this could bring the engagement closer to the work effort and expectations associated with an audit, despite continuing to provide limited assurance.
Timeliness is an important feature of interim financial reporting. The IAASB should therefore carefully balance additional requirements against the need to provide timely limited assurance and consider the potential implications for cost and companies’ willingness to obtain interim reviews.
We recognise the importance of addressing going concern but do not believe that all the proposed requirements are proportionate to a limited assurance engagement. In particular, we are concerned about requirements that may result in work effort approaching that of an audit and call for better alignment with the applicable interim financial reporting framework and management’s reporting obligations.
We also do not support introducing a separate Going Concern section in the interim review report. Such a section risks blurring the distinction between limited and reasonable assurance and creating an expectation gap. If retained, it should clearly communicate that the procedures performed are less extensive than those performed in an audit.
ISRE 2410 reviews are performed by the auditor of the entity’s annual financial statements. We therefore call for greater clarity on how knowledge obtained through previous and ongoing annual audits should be leveraged when planning and performing the interim review. This would better reflect the nature of recurring engagements, avoid unnecessary duplication and reinforce the distinction between an interim review and an audit.
Overall, we encourage the IAASB to ensure that the revised ISRE 2410 remains clearly distinguishable from an audit and that any additional work effort is proportionate to the objective of providing timely limited assurance.
